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GPMI Disinfectant Wipes Maker Files for Bankruptcy, Laid Off Dozens of Workers

The onset of a global health pandemic appeared like it would bode well for companies in the right industry, like Gilbert disinfectant wipes manufacturer GPMI Company but things didn’t go to plan.

After a major expansion deal with an Israeli manufacturing partner went sour, the company was forced to cut its workforce in half.

This week, the company filed for Chapter 11 bankruptcy protection. That means the company makes a side deal with its secured creditors in exchange for its biggest debts to be restructured. A secured creditor, like a bank, has collateral if loans go into default.

Often during bankruptcy proceedings unsecured creditors — subcontractors of subcontractors and local small businesses — could get left holding lots of empty bags.

According to bankruptcy filings in federal court, GPMI has more than 100 creditors who want to get paid. The company had between $10 million and $50 million in assets or the total value of the business and between $10 million and $50 million in liabilities to creditors, or debts to be paid.

GPMI has $13.3 million in unsecured claims across 116 creditors, records show.

It generated $14 million in revenue during 2021 bad business deal and all, bankruptcy records show.

Yarron Bendor, an Israeli entrepreneur, founded GPMI in 1989, and it’s been headquartered in Arizona ever since. The company manufactures wet wipes of various types for companies that include American businesses The Clorox Company and Procter & Gamble Company, but also the Dial brand created by German giant Henkel AG, according to court filings.

GPMI had more than 100 employees. Most were handed pink slips.

One recent, scathing Google review of the company from a former employee described a tumultuous year, where dozens of newly hired employees were let go and hours were so unpredictable “to where at some point people started to quit.”

The business — which did not immediately return Phoenix New Times’ inquiries for this article — said in court documents that its financial troubles began with the pandemic.

Although in the spring of 2020, demand for wet wipes and other sanitizing products spiked, clearing them off the shelves of pharmacies and grocery stores, shortages in manufacturing materials made it increasingly difficult for GPMI to keep up.

We all remember scouring empty shelves for them.

Furthermore, cheaper, inferior products flooded the market, which, according to GPMI, contributed to depressed demand in 2021.

But it was a deal with an Israeli hygiene behemoth, Albaad Massuot Yitzhak Limited, that ultimately landed GPMI in major debt.

Albaad is publicly traded and claims to be one of the world’s largest manufacturers of wet wipes and other hygiene products. It does business in the U.S. and Europe in addition to Israel. In the spring of last year, it offered GPMI an appealing deal: It wanted to order tens of millions of goods from the company, to help beef up its offerings in the U.S. when demand was through the roof. Albaad promised the local company $80 million in orders during the first year and $100 million by the second year, GPMI claims.

The company’s expansion, at the time, was touted as a win for Gilbert’s economy. GPMI spent $7.5 million to ramp up operations, offset somewhat by Albaad’s initial payment of $3.75 million.

But the deal quickly went awry.

GPMI built out new facilities, hired dozens of new employees, and began shipping out the product.

Albaad’s client needed FDA approval for its product but ran into problems securing it.

Albaad never paid up or even picked up the products, bankruptcy filings claim. GPMI ended the year with revenues $37 million less than anticipated.

GPMI was stuck paying $17,000 to store product they didn’t have a buyer for, and was $800,000 short in budgeted revenue. And the Israeli company wasn’t prepared to buy $25.5 million more worth of the product by the end of December 2021.

“Further payment promises were made by Albaad but nothing materialized,” Bendor said in court filings.

It turns out, Albaad decided to tell its shareholders it would write off $10 million from its failed U.S. expansion venture “due to issues with its customers and distributor and seeking litigation options with its partners,” GPMI claims in bankruptcy court filings.

Still, GPMI painted a rosy future of its sales, saying that it still anticipated more than $15 million in revenue for the upcoming year, given new clients that it had developed.

The company has secured a $2.5 million loan in order to pay its remaining employees and other expenses until it can restructure and even considered selling itself to get out from its mountain of debt.

It also says it plans to seek damages from Albaad in civil court, whose “failure to perform threatened the very survival of GPMI.”



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